ITO, Meerut V. M/s. Meerut Polypack Pvt. Ltd., Meerut

ITA 233/DEL/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 6236 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 2 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-03-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 06-01-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 10-01-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P DAM KANUNJA
• Assessee Lawyers: RAVINDER AGARWAL
• Keywords: Bogus purchase; Period of limitation; Time period of passing order
• Section: 133(6); 6

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH E NEW DELHI BEFORE SHRI J.S. REDDY, ACCOUNTANT MEMBER AND SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER ITA NO. 233/DEL/2014 AY: 20 10-11 INCOME TAX OFFICER, VS M/S MEERUT POLYPACK PV T. LTD. WARD-1(4), MEERUT. C-75, DEFENCE COLONY, MEERUT. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI P. DAMKANUNJA, SR. DR RESPONDENT BY: SHRI RAVINDER AGARWAL DATE OF HEARING: 06.01.2016 DATE OF PRONOUNCEMENT: 30.03.2016 ORDER PER SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER THE PRESENT APPEAL HAS BEEN FILED BY THE DEPARTMENT AGAINST THE ORDER DATED 8.10.2013 PASSED BY THE LD. COMMISSIONER OF INCOME TAX(APPEALS), MEERUT FOR ASS ESSMENT YEAR 2010-11. 2. THE FACTS RELEVANT TO THE CASE ARE THAT THE ASSE SSEE IS ENGAGED IN THE MANUFACTURE AND TRADING OF PP/HDPE F ABRICS AND BAGS AND DURING THE YEAR UNDER CONSIDERATION HAD CL AIMED EXPENDITURE OF RS 2,7 6,58,7 44/-. NOTICES UNDER SECTION 133 (6) OF THE ACT HAD BEEN ISSUED TO 22 PARTIES, WHO HAD S UPPLIED RAW MATERIALS TO THE ASSESSEE, ON THE ADDRESSES PROVIDE D BY THE ASSESSEE. IN 16 CASES, THE NOTICES WERE RETURNED BA CK UNSERVED I.T.A. NO.233/DEL/2014 ASSESSMENT YEAR 2010-11 2 OR THERE WAS NO COMPLIANCE FROM THE PARTIES FROM WH OM THE PURCHASES WERE PURPORTEDLY MADE. IT HAS BEEN STATED BY THE AO THAT THE COUNSEL OF THE ASSESSEE WAS CONFRONTED WIT H THE RESULT OF THE ABOVE ENQUIRIES AND WAS GIVEN AN OPPORTUNITY TO PRODUCE THE PARTIES ALONG WITH THE CONFIRMATION SO AS TO ESTABL ISH THE VERACITY OF THE TRANSACTIONS MADE BY THE ASSESSEE. HOWEVER, DESPITE GIVING OPPORTUNITIES, THE ASSESSEE FAILED EITHER TO PRODUC E THE PARTIES OR TO FILE THE CONFIRMATIONS. IN RESPECT OF ONE PARTY FROM WHOM THE RESPONSE HAD BEEN RECEIVED, THERE WAS A DISCREPANCY BETWEEN THE INFORMATION GIVEN BY THE ASSESSEE AND THE INFORMATI ON GIVEN BY THAT PARTY. THEREFORE, THE AO PROCEEDED TO MAKE AN ADDITION TO THE TOTAL INCOME OF THE ASSESSEE. AN ADDITION OF RS 22,95,391/- HAD BEEN MADE IN RESPECT OF 4 PARTIES, WHERE THE AO NOTED THAT THE ENQUIRY LETTERS HAD BEEN RETURNED BY THE POSTAL AUTHORITIES. ADDITION OF RS. 1,81,78,857/- HAD BEEN MADE IN RES PECT OF 11 PARTIES WHERE THE ENQUIRY LETTERS HAD NOT BEEN COMP LIED WITH. FINALLY, ADDITION OF RS 1,82,515/- WAS MADE IN ONE CASE WHERE THE AO NOTED THAT THERE WAS DISCREPANCY BETWEEN THE INFORMATION FURNISHED BY THE ASSESSEE AND THE INFORMATION GIVEN BY THE SELLER. THUS A TOTAL ADDITION OF RS. 2,06,56,770/- WAS MADE BY THE AO. I.T.A. NO.233/DEL/2014 ASSESSMENT YEAR 2010-11 3 3. ON APPEAL BEFORE THE LD. FIRST APPELLATE AUTHORI TY, ALL THE ADDITIONS WERE DELETED. 4. NOW, THE DEPARTMENT HAS PREFERRED THIS APPEAL BE FORE US AND THE FOLLOWING GROUNDS HAVE BEEN RAISED:- 1. WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE C ASE, THE CIT(A) HAS ERRED IN LAW IN DELETING THE ADDITIO N OF RS.22,95,391/- U/S 68 OF THE I.T. ACT, 1961, BEING UNPROVED SUNDRY CREDITORS IGNORING THE FACT THAT TH E ASSESSEE FAILED TO PROVE THEIR GENUINENESS. THE CONFIRMATIONS IN RESPONSE TO THE NOTICES U/S 133(6) OF THE IT ACT, 1961 WERE ALSO NOT RECEIVED AND AFTER THE A O CONFRONTED THE SAME TO ASSESSEE IT STILL FAILED TO CONFIRM THE CREDITORS DESPITE OPPORTUNITIES HAVING BEEN ALL OWED. 2. WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE C ASE, THE CIT (A) ERRED IN LAW IN DELETING THE ADDITION O F RS. 1,81,78,857/- BEING BOGUS PURCHASES IGNORING THE FA CT THAT SINCE THE LETTERS OF ENQUIRY U/S 133(6) OF THE IT ACT, 1961 SENT TO THE PARTIES BY THE AO REMAINED UNCOMPL IED WITH AND PURCHASES REMAINED UNPROVED. DESPITE BEING GIVEN OPPORTUNITY TO ESTABLISH THE VERACITY OF THE TRANSACTION, THE ASSESSEE FAILED TO PROVE THE IDENT ITY OF SELLER AND GENUINENESS OF TRANSACTION. 3. WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE C ASE, THE CIT(A) HAS ERRED IN LAW IN DELETING THE ADDITIO N OF RS. 1,82,515/-, ON ACCOUNT OF NON-RECONCILIATION OF PUR CHASE, IGNORING THE FACT THAT DETAILS OF INFORMATION AS RE CEIVED U/S 133(6) WAS DIFFERENT FROM THE DETAILS FILED BY THE ASSESSEE. 5. THE LD. DR SUPPORTED AND RELIED HEAVILY ON THE O RDER OF THE ASSESSING OFFICER WHEREAS THE LD. AR PLACED STRONG RELIANCE ON THE ORDER OF THE LD. CIT (A) AND SUBMITTED THAT THE LD. CIT (A) I.T.A. NO.233/DEL/2014 ASSESSMENT YEAR 2010-11 4 HAS CORRECTLY ADJUDICATED THE ISSUE AND HENCE THE S AME SHOULD BE CONFIRMED. 6. WE HAVE PERUSED THE RECORDS AS WELL AS THE ORDER S OF THE AUTHORITIES BELOW. IT IS SEEN THAT THE LD. CIT (A) HAS DISCUSSED THE ISSUES BEFORE HIM AT GREAT LENGTH IN PARA 2.7 O F HIS ORDER WHICH IS REPRODUCED BELOW FOR READY REFERENCE:- 2.7 THE FACTS OF THE CASE HAVE BEEN PERUSED. IT IS NOTED THAT THE ASSESSMENT IN THIS CASE HAD BEEN TAK EN UP ONLY AT THE FAG END OF THE LIMITATION PERIOD AND HAD PROCEEDED IN A HAPHAZARD MANNER, RESULTING IN THE A O PASSING THE ORDER WITHOUT GIVING PROPER OPPORTUNITY TO THE ASSESSEE AND WITHOUT THE PROPER APPRECIATION OF THE EVIDENCES FILED IN SUPPORT OF PURCHASES. THIS IS ST ARKLY EVIDENT FROM THE FACT THAT ADDITION OF SUBSTANTIAL AMOUNT HAS BEEN RESORTED TO BY THE AO EVEN WITHOUT CONFRON TING THE ASSESSEE IN RESPECT OF SEVERAL PARTIES AND THE OPPORTUNITY GIVEN IN RESPECT OF OTHER PARTIES, THE TIME PERIOD FOR MAKING THE COMPLIANCE WAS WHOLLY INADEQUATE. THE CASUAL MANNER IN WHICH THE ASSESSMENT ORDER HAS BEEN PASSED IS ALSO EVIDENT FR OM THE FACT THAT IN CERTAIN CASES, BOTH THE AGGREGATE PURCHASE' MADE FROM A PARTICULAR PARTY AS ALSO THE CREDIT BALANCE OUTSTANDING TO THAT PARTY AT THE END OF THE YEAR HAVE BOTH BEEN ADDED TO THE TOTAL INCOME (KHANNA POLYMERS & PINE POLYMERS). THE AO HAS NOT EVEN BOTHERED TO NOTE THAT ADDITION IN RESPECT OF THE PA RTIES REFERRED TO AT SL. NO. 5 & 6 OF THE SECOND CHART GI VEN ON PAGE 3 OF THE ASSESSMENT ORDER ARE ALREADY FIGURING AT SL NO 1 OF THE 1ST CHART AND SL. NO 2 OF THE 2ND CHART ON THE SAME PAGE. IN RESPECT OF M/S RELIABLE & M/S BARAUT POLYPACK, IT HAS BEEN MENTIONED IN THE FINAL REMAND REPORT THAT THE STATEMENT IN THE ASSESSMENT ORDER T HAT THERE WAS NO COMPLIANCE TO THE ENQUIRY LETTERS IS INCORRECT. IN RESPECT OF ONE-PARTY FOR WHICH THE ASSESSMENT ORDER HAS STATED THAT THERE WAS A DISCREPANCY BETWEEN THE INFORMATION GIVEN BY THE I.T.A. NO.233/DEL/2014 ASSESSMENT YEAR 2010-11 5 ASSESSED AND THE INFORMATION PROVIDED BY THAT PARTY , THE REMAND REPORT CATEGORICALLY STATES THAT THERE W AS NO SUCH DIFFERENCE. THERE IS NO PURCHASE FROM M/S VINK Y DURING THE RELEVANT PREVIOUS YEAR, AS ADMITTED IN T HE FINAL REMAND REPORT, YET THE AO HAS PROCEEDED TO MA KE AN ADDITION OF THE CREDIT BALANCE OUTSTANDING TO TH IS PARTY AT THE END OF THE YEAR. SECONDLY, AS RIGHTLY POINTED OUT BY THE LD. AR, UNLIKE CASH CREDITS, PURCHASES A RE VERIFIABLE BY MULTIPLE EVIDENCES SUCH AS TRANSPORTA TION OF GOODS, QUANTITATIVE DETAILS OF CONSUMPTION AND, MOST IMPORTANTLY, PAYMENTS MADE THROUGH BANKING CHANNELS . IF INDEED THE AO WISHES TO VERIFY THE GENUINENESS O F PURCHASES, IT IS INCUMBENT UPON HIM TO EXERCISE THE POWERS AVAILABLE UNDER THE ACT TO CARRY OUT THE VERIFICATIONS REFERRED TO ABOVE AND HE CANNOT SIMPL Y PROCEED TO MAKE ADDITION TO THE TOTAL INCOME WITH A BLAND REMARK THAT THE ENQUIRY LETTERS HAD NOT BEEN RESPONDED BY THE PURCHASERS, WITHOUT EVEN EXERCISIN G DUE DILIGENCE IN THIS REGARD. IT IS NOTED THAT CONFIRMATIONS HAVE BEEN FILED IN RESPECT OF ALL THE PARTIES WHOSE ENTRIES WERE NOT CONSIDERED GENUINE IN THE ASSESSMENT ORDER EXCEPT IN RESPECT OF THE PURCHASE FROM M/S KANTAS, FOR WHICH THE RELEVANT ACCOUNT IN THE B OOKS OF THE ASSESSEE AND COPIES OF THE PURCHASE BILLS HA VE BEEN FURNISHED. A PERUSAL OF THE LEDGER ACCOUNT SHO WS THAT OUT OF AGGREGATE PURCHASE OF APPROXIMATELY RS 11 LAKHS, EXCEPT FOR PAYMENTS AGGREGATING TO APPROXIMA TELY RS 1 LAKH, ALL OTHER PAYMENTS HAVE BEEN MADE THROUG H BANKING CHANNELS AND ONLY A BALANCE OF RS 2 LAKH APPROXIMATELY IS OUTSTANDING TO THAT PARTY AT THE E ND OF THE YEAR. CONFIRMATION HAS ALSO NOT BEEN FILED FOR M/S VINKY, FROM WHOM ACTUALLY THERE IS NO PURCHASE DURI NG THE YEAR, AS HAS BEEN STATED ABOVE. FURTHER, IN THE FINAL REMAND REPORT, IT HAS BEEN POINTED OUT THAT IN RESP ECT OF M/S KHANNA POLYMERS, NO ADDITION CAN BE MADE ON ACCOUNT OF BOGUS PURCHASES. IT IS ALSO NOTED THAT T HE REMAND REPORT DOES NOT CAST ANY DOUBT REGARDING THE AUTHENTICITY OF THE PURCHASES OR ANY DISCREPANCY NO TED IN THE CONFIRMATIONS FILED. I.T.A. NO.233/DEL/2014 ASSESSMENT YEAR 2010-11 6 7. IT IS SEEN THAT THE LD. CIT (A) HAS PASSED A REA SONED ORDER AFTER DUE APPRAISAL OF ALL THE EVIDENCES BEFORE HIM AS WELL AS THE AO AND THE OBSERVATIONS AND FINDINGS RECORDED BY HI M COULD NOT BE CONTROVERTED BY THE DEPARTMENT IN THE PRESENT AP PEAL BEFORE US. HENCE, IN VIEW OF THE CATEGORICAL FINDINGS OF THE LD. CIT (A) REMAINING UN-CONTRADICTED, WE DECLINE TO INTERFERE AND ACCORDINGLY UPHOLD THE IMPUGNED ORDER. 8. IN THE RESULT, THE APPEAL OF THE DEPARTMENT IS D ISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH OF MARCH, 2016. SD/- SD/- (J.S. REDDY) (SUDHANSHU SRIVASTAVA) ACCOUNTANT MEMBER JUDICI AL MEMBER DATED: THE 30TH OF MARCH, 2016 GS COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 4. DR, ITAT BY ORDER ASSTT. REGISTRAR I.T.A. NO.233/DEL/2014 ASSESSMENT YEAR 2010-11 7